EBK MICROECONOMICS
2nd Edition
ISBN: 9780134524931
Author: List
Publisher: YUZU
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Question
Chapter 12, Problem 6Q
To determine
The reason for the producer not opting to charge a high
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It is often said that a competitive market is more beneficial for the consumers as compared to the monopoly market. Why ? Explain.
Why do some restaurants charge very high prices for wine, drinks and bottled water and yet quite reasonable prices for food?
What is price discrimination? From the perspective of running a business, is this a good thing or bad thing for profits?
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- The graph below shows the daily demand curve for fresh spring water in a remote mountain village in the land of Far Country. The only spring is controlled by the village chief who earns revenue from the sale of water in order to cover the costs of running the village. The villagers bring their own jugs and pay a price per jug as they leave. a. What quantity of jugs would be sold each day in order to maximize his total revenue? Quantity: b. What price would the chief charge? Price: $ c. What is MR at this price and quantity? MR: d. Assuming no marginal costs, what price would the chief charge in order to maximize his total profits? Price: $arrow_forwardHow does price discrimination play a role in the economy?How does the idea of price discrimination apply to an industry?arrow_forwardSuppose in a small town called Utopia live 200 children and 300 adults. The only entertainment in the town is a theatre. The theatre has a fixed cost of 2000 dollars for preparing each play. However, once the play is ready, then selling an additional ticket has no cost at all. Demand for adult citizens and children are given in the following table What price would this theatre company charge for an adult ticket and for a child’s ticket? How much will it make?arrow_forward
- why price discrimination is profitable in the perfume market or industry ?arrow_forwardWhy don’t monopolists try to establish the highest price possible, as many people allege? What would happen to sales? To profits?arrow_forwardQ1: If only one airline service a town, does a monopoly exist? What about competition from other services? Q2: Suppose that you are an orange grower. Would you expect the demand for your orange to be more elastic or more inelastic? Why? Q3: Mr Han Cook says that marginal cost is just a funny name for average total cost. What do you think about this ideas? Q4: How prices reaches equilibrium? Give an example.arrow_forward
- Where will you see more price discrimination: In monopoly-type markets with just a few firms or in competitive markets with many firms? Why?arrow_forwardIlia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price. a. The most likely reason that the price is the same is that _gas stations always make a profit, so they can charge any price they want. _drivers need gas and are willing to pay whatever price a gas station charges. _government regulation requires both gas stations to charge the same price. _consumers view gasoline from different gas stations as perfect substitutes. b. If one station increases its price, _it will be fined by the government. _it will sell more gasoline. _it will make a higher profit. _it will lose customers to the cheaper station across the street.arrow_forwardHow much is total surplus if the market is perfectly competitive?How much is total surplus if the market is controlled by a single price monopolist?Suppose the single price monopolist started charging all customers the maximum price they are willing to pay. How much additional surplus is created?arrow_forward
- Why are changes of prices of commodities is very responsive to the needs of the consumer? Is price discrimination considered as fair business practice. Why do companies tends to sell commodity to different buyers at different prices?arrow_forwardSuppose an investigation reveals that the prices charged for drinks at a tourist resort are significantly higher than the prices charged for the same drinks at hotels in the nearby village. What might the explanation for this situation be?arrow_forwardIn terms of perfect first-degree price discrimination, could you show that the firm's price of the last unit sold would equal the marginal cost of producing that unit and that the firm would produce the perfectly competitive level of output? If you can use a graph, that would help me understand thank you.arrow_forward
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